- SCOTT EISEN/BLOOMBERG
After news emerged Friday that Twitter might be close to a sale, shares of the social-media company shot up 22% in trading, going from just over $18.50 a share to more than $22 a share.
Yet Jason Helfstein, an analyst at Oppenheimer, thinks no one should buy Twitter at its current price because the social-media company is facing a stagnating user base and dwindling impact.
“At $22 per share, we believe that Twitter is fully valued at best, and potentially overvalued, precluding a potential acquirer from paying a normal take-out premium from the last trading price,” Helfstein said in a note to clients. “In addition, we see any acquirer factoring in the large capital investment necessary to make Twitter’s platform competitive again.”
Helfstein also said the company’s attempts at reigniting user interest in the platform through Olympics coverage and streams of the NFL’s “Thursday Night Football” games had failed. The football engagement has been particularly disappointing, the note said.
“It is our belief that the stream would have done better if it were offered on a platform with a wider reach, such as Facebook,” Helfstein said. “Again, we don’t see any significant increase in search interest for Twitter on the day of the first Thursday Night Football stream, September 15th.”
To be fair, comparing Twitter’s stream to linear TV is a bit of a stretch, given that online streams for live events typically underperform linear TV. Additionally, the stream drew generally positive reviews, and one can only speculate how many people would have watched the stream on another platform.
Regardless, it’s obvious that Twitter’s growth has slowed, and for that reason Helfstein thinks it no longer makes sense for any buyer at the current price. For two of the largest rumored buyers – Salesforce and Microsoft – Helfstein thinks there is no chance.
“Lastly, media reports state Twitter’s asking price at about $30 billion,” the note said. “We don’t believe that Salesforce would be willing to pay 60% of its market cap for Twitter. Microsoft is obviously out of the question, having just acquired LinkedIn.”